An Australian Financial Services Licence, or AFSL, is a legal licence provided by the Australian Securities and Investments Commission (ASIC). Certain businesses in the country’s financial services industry are required to have an AFSL, depending on the type of financial products or services they provide.

No matter what kind of financial product or service you offer, you’ll need to understand the ins and outs of AFSLs, including how to secure one, what it means to be a licensee and what your new obligations will include. You’ll also be subject to certain regulatory requirements demanding a high level of compliance.

Fortunately, MIntegrity can help. With a powerful combination of software and expert services, the MIntegrity team is here to support your financial services business from licence application to ongoing compliance obligations.

What is an AFSL?

An AFSL entitles licensees to perform certain tasks for, with and on behalf of financial clients, including:

• Providing financial advice.
• Offering financial products.
• Operating a registered scheme.
• Providing custodial or depository services.

No organisation can legally sell, advertise or deal in financial products or services without an AFSL. You must have this licence from the day you start your business. You offer a financial service or product if you:

• Provide any kind of financial advice, including product-specific recommendations to clients or the general public.
• Deal in or make a market for any financial product, including buying/selling shares on a client’s behalf or regularly quoting prices for buying/selling financial products.
• Provide custodial or depository services.
• Provide services for crowdfunding, superannuation trustees, claims handling and settling, etc.
• Operate the business and/or conduct the affairs of a corporate collective investment vehicle (CCIV).

Note that ASIC provides specific definitions for “financial product” and “financial service” in multiple resources, including regulatory guides, the Corporations Act 2001 and the Corporations Regulations 2001. Depending on your unique circumstances, your organisation may be exempt from the requirement to hold an AFS licence; alternatively, you may be allowed to operate under a limited licence or provide services as an authorised representative of an AFS licensee. If in doubt, always seek legal advice.

ASIC considers the licensing process a “point-in-time assessment” of the organisation, not its owners, employees or offerings. That means ASIC doesn’t endorse any AFS licensee, guarantee its service quality or state that clients won’t incur losses. The commission encourages consumers to check the ASIC Connect Professional Registers to ensure companies or individuals hold an AFSL.

To obtain this licence, your company must complete an AFSL application and meet basic standards of operation in the Australian financial services industry. ASIC will  need to be comfortable that you’re capable and competent in performing the type of business specified in your application and that you have sufficient resources to provide those services. It’s your responsibility to maintain these standards throughout the lifetime of your AFS licence. An AFSL application fee is payable and is varied depending on the types of clients you serve, products you offer and complexity of your licence.

AFSL compliance obligations and requirements

To obtain an AFSL licence, you’ll need to meet several requirements. ASIC uses this “checklist” as part of its role as regulator of the financial services industry. The goal is to maintain and improve the financial system’s performance for market participants and consumers alike, promoting confident and informed participation while taking necessary steps to enforce the law.

To do this, ASIC ensures all AFSL applicants can meet requirements in three basic categories:

• Competency: You must be capable of clearly and correctly performing the kind of business you’re applying for, including any special services.
• Resources: You must be capable of supporting your business and clients through your products, services or other offerings. This includes financial, technological and human resources.
• Compliance: Your entire business must comply with obligations including training, conflicts management, insurance, dispute resolution and more.

Although particular requirements depend on your business and the specifics of your application, there are “general obligations” you must follow from the day your AFSL licence is issued. ASIC considers these to be flexible principles and does not give prescriptive guidance on how to apply them; instead, the Corporations Act places that responsibility on individual licensees.  

At MIntegrity, we know compliance is more than a checklist. That’s why we provide a full range of regulatory risk and compliance services to support AFSL holders.

Author : MIntegrity Views : 3

This Blog Has Been PowerShared™ Successfully!

Australian Financial Services Licence (Afsl) Compliance & Obligations : Share Sharing, Please Wait...